Latest news with #SenateStandingCommitteeonFinance
Business Recorder
22-05-2025
- Business
- Business Recorder
FBR endorses viewpoint of Senate panel: Undue taxation relocating businesses to Dubai
ISLAMABAD: The Federal Board of Revenue (FBR) on Wednesday endorsed the viewpoint of Senate Standing Committee on Finance that high tax rates and strict taxation laws are prompting many businesses to relocate their business operations to Dubai. Member Inland Revenue Operations, Hamid Attique Sarwar, acknowledged this development while briefing the Senate Standing Committee on Finance and Revenue, chaired by Senator Saleem Mandviwalla. Members of the committee expressed serious concerns over this growing trend, warning that excessive taxation is driving businesses out of Pakistan. Senator Farooq H Naek noted that property tax rates for non-filers currently range from five percent to 35 percent, and added that many individuals have failed to declare income in Pakistan while owning properties in the UAE — an indication of widespread tax evasion. The committee emphasised the urgent need for a more business-friendly environment to prevent further capital flight and retain investment within the country. Another major concern highlighted during the meeting was the increasing migration of Pakistani businesses to Dubai, allegedly driven by high tax rates and stringent regulations. The committee was informed by the FBR officials that this trend has been officially acknowledged. Chairman Mandviwalla emphasised that instead of trying to get Dubai-based businesses liquidated, we must provide better facilities and incentives for businesses to stay and grow in Pakistan. The FBR officials further briefed the committee that the property tax rates for non-filers now range between five percent and 35 percent, acknowledging that the current tax regime imposes a heavy burden. 'It is acknowledged that taxes are being implemented very heavily,' they admitted, while clarifying that the FBR is responsible only for collecting the taxes that are legislated. 'Whatever tax is levied will be collected,' officials stated. Meanwhile, Members Operations FBR has disclosed that tax department has proposed to increase the maximum penalty for business-related tax evasion effective July 2025. Currently, the fine stands at PKR 500,000, which Sarwar described as inadequate to serve as a deterrent. He noted that lower penalties have weakened efforts to tackle tax fraud. The revised penalty rates will be presented in the Parliament for approval. Sarwar also informed the committee that daily enforcement operations are underway in major cities, including Lahore, Karachi, and Islamabad, with 20 businesses being sealed daily for tax violations. Highlighting sector-specific efforts, he stated that FBR's crackdown in the sugar industry led to a 34.5 percent increase in tax revenue. Additionally, 95 percent of the sector is now integrated into a real-time monitoring system. To further combat tax evasion, the FBR is planning to launch a national media campaign and is considering rewards for whistleblowers who report tax fraud. Despite a proposal by Senator Faisal Vawda, the FBR officials maintained that Pakistan, currently under IMF loan programmes, cannot offer such schemes due to the need for fiscal discipline. Addressing concerns about export refunds, the FBR assured the committee that refund payments are being processed without delay for five key export sectors: textiles, leather, surgical instruments, and export-related goods. Refunds are now processed within 72 hours, although some practical challenges prevent daily issuance. The remaining export sectors, which were previously handled manually, have now been integrated into the central refund system. The FBR committed to releasing refunds for all sectors by May 23, although issues remain particularly in the food export segment. Additionally, he proposed phasing out local refunds, stating that, globally, tax refunds are typically linked only to exports. A key agenda item was the delay in the export and other sales tax refunds. Chairman Committee Saleem Mandviwalla expressed deep concern, stating, 'Many complaints on non-refund of sales tax have been received. Refunds are to be made within 72 hours; however, months have now passed in many cases.' He further added either stop the policy or manage it properly—and identify the problem. FBR officials informed the committee that all verified outstanding sales tax refunds in five major export-oriented sectors—textiles, leather, sports goods, carpets, and surgical goods — have been disbursed through the FASTER (Fully Automated Sales Tax e-Refund) system. They reported no current pendency of valid claims under the FASTER stream, with refunds being issued on a regular monthly basis. According to the FBR, from July to April of the current fiscal year (2024–2025), a total of Rs 317.41 billion was disbursed against 33,204 Refund Payment Orders (RPOs) via the FASTER system. Despite the FBR's claims, Senator Mandviwalla raised alarm over the food export sector, which contributes $4.8 billion in exports, noting that its sales tax refunds have not yet been released. He urged the FBR to restructure refund disbursements based on a sectoral priority framework. FBR officials responded that refunds for the food export sector are expected to be released by Friday. They added that all '72 export sectors' under the FBR's jurisdiction are being considered in the refund process. The chairman also directed the FBR to submit a comprehensive report detailing all outstanding refunds, including timelines, affected sectors, and the reasons for delay. Due to the absence of several members, and the federal minister for finance, the remaining agenda items were deferred to the next scheduled meeting. Copyright Business Recorder, 2025
Express Tribune
21-05-2025
- Business
- Express Tribune
Govt to raise tax evasion fines to Rs5 million
The federal government has decided to increase fines in the upcoming budget in order to curb tax evasion among shopkeepers and businesses, Express News reported. During a meeting of the Senate Standing Committee on Finance on Wednesday, Federal Board of Revenue (FBR) officials briefed members that fines for shopkeepers who use to evade taxes, will be raised from Rs0.5 million to Rs5 million while also proposing a reward scheme for those who report fake receipts used to avoid taxes. According to the FBR, the upcoming budget will impose heavier penalties on retailers involved in tax evasion as the government aims to expand the number of retailers registered at points of sale, targeting seven million retailers. The FBR also proposed a reward scheme to incentivise reporting of fake receipts used to avoid tax payments, with informants eligible for cash prizes up to Rs10,000. Read more: IMF official visits amid budget talks Officials said monitoring will be strengthened by deploying cameras and additional staff at retail points. The upcoming budget will also focus on sectors such as poultry, tobacco, beverages, and sugar mills, where enhanced oversight has already led to increased tax collection. Meanwhile, Senate Finance Committee Chairman Saleem Mandviwala expressed concern over long delays in sales tax refunds, which exporters claim can take months instead of days. FBR officials said they are prioritising refunds for key export sectors including textiles, sports goods, carpets, leather, and surgical products, promising faster processing. To combat tax evasion, authorities said daily business closures and fines are being enforced in major cities including Lahore, Karachi, and Islamabad, with plans to raise fines and extend measures nationwide. Read more: Businessmen oppose tariff rationalisation A media campaign against fake receipts and tax evasion will be launched soon, with plans to involve university students to help monitor thousands of shops across the country, they added. The committee was informed that new higher fines could come into effect from July 2025. Officials said the current lower penalties have weakened enforcement efforts and the government will seek parliamentary approval for the increases.
Business Recorder
15-05-2025
- Business
- Business Recorder
Senate body approves Off-the-Grid (CPPs) Levy Bill, 2025
ISLAMABAD: Despite opposition from industries in Khyber Pakhtunkhwa, the Senate Standing Committee on Finance approved a government bill – Off-the-Grid (Captive Power Plants) Levy Bill, 2025, on Thursday. Senator Anusha Rehman presided the meeting of the committee held here on Thursday in the Parliament House. The bill will also be moved in the National Assembly Standing Committee on Petroleum Division on Friday (today). Off-the-grid levy on gas-based CPPs: Govt moves copy of proposed bill in Senate Member Committee from Khyber Pakhtunkhwa Mohsin Aziz strongly opposed the bill, labelling it 'anti-Pakistan' and stated that it would lead to the closure of industries after they were previously encouraged to install captive power plants due to a lack of electricity in the country. The chairperson of the committee, Anusha Rehman, countered Senator Aziz's arguments, suggesting his stance appeared to oppose cheaper electricity. Senator Aziz denied this. Senator Rehman then noted that Senator Aziz, being online, his vote would not be counted. Senator Manzoor Kakar expressed his support for the bill, calling it 'very good,' and Senator AnushaRehman echoed this sentiment, highlighting the prime minister's promise to reduce electricity costs. Earlier, Petroleum Secretary Momin Agha briefed the committee on the bill, stating that its purpose is to reduce the burden of capacity utilisation and ultimately lower electricity prices for the general public. He informed the committee that a five percent levy was immediately imposed after the issuance of the ordinance, with the rate set to increase to 10 percent from July 2025, 15 percent in February 2026, and 20 percent in August 2026. Additional Secretary Finance explained that captive power plants were initially asked to shut down, leading companies to seek legal recourse. Consequently, the government decided to impose a levy instead of enforcing closure. He noted that out of 5,500 industrial connections, 1,100 have captive power plants, and these industries are currently operating on normal tariffs. Petroleum Division officials informed the committee about the increasing gas prices for captive power plants, rising from Rs2,750 per MMBTU in February 2024 to Rs3,000 in June 2024 and Rs3,500 in February 2025. On Wednesday, the government had moved a copy of the bill that provides for imposing an off the grid levy on natural gas based captive power plants in Senate session. Deputy Prime Minister Ishaq Dar, in his additional official capacity as Leader of the House in Senate, had moved the bill on the maiden day of the Senate's 350th session. Dar moved the bill in the Senate, which was referred to the Senate Standing Committee on Finance and Revenue. Copyright Business Recorder, 2025
Business Recorder
14-05-2025
- Business
- Business Recorder
SECP tells Senate panel: CSR compliance for listed cos a must
ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP), Tuesday, informed the Senate Standing Committee on Finance that listed companies are required to duly comply with the corporate social responsibility (CSR) requirements in the country. The SECP officials informed Senate Standing Committee on Finance Tuesday that the SECP has given responsibility to the Boards of the listed companies to deal with Environmental, Social, and Governance (ESG) considerations and Gender Equality and Diversity and Inclusion (DE&I). Senate Standing Committee on Finance, Tuesday, also sought comments of NGOs on 'The Corporate Social Responsibility Bill 2025'to provide for the corporate social responsibility for companies, banks, and SOEs (State-owned enterprises) with matters arising out of or connected therewith. The sub-committee, headed by Dr Mirza Ikhtiar Baig, MNA, reviewed the private members bill introduced by Dr Nafisa Shah, MNA, by inviting experts and stakeholders. The SECP officials informed about the CSR reforms undertaken by the SECP including CSR reporting guidelines, integration of CSR into Code of Corporate Governance as well as capacity building and awareness programs to educate companies on CSR. The SECP officials added that they aim to build a strong and growing corporate sector that is attractive to both domestic and foreign investors, ensuring economic stability. The committee assessed the implications and potential impact of the legislation based on their findings. MNA Ali Sarfraz recommended constitution of a separate government department for regulating/spending the funding of the CSR. Till a federal department is not constituted, there are apprehensions of wastage of CRS funds. The government needs to issue guidelines after collection of CRS funds. Among stakeholders, CEO of a company disclosed that it is a wrong impression that the corporate sector is earning huge profits. All chambers are spending reasonable amount of funds on CSR activities. The family NGOs are reregistered as per government rules/regulations. Through family NGOs, funds are allocated to poor segments of the society. Under the proposed law, every company excluding the non-profit, or charitable companies, incorporated under the provisions of the Companies Act, with a turnover of more than Rs1 billion shall earmark not less than one percent of its net profit which shall be spent for activities or projects relating to corporate social responsibility as provided in the Schedule under the provisions of this Act. Provided that companies with less turnover shall follow the guidelines issued by the SECP. The Board of Directors of the company shall ensure that the company shall spend the amount earmarked under sub-section (l), of this section in pursuance of its Corporate Social Responsibility Policy. Copyright Business Recorder, 2025
Express Tribune
16-04-2025
- Business
- Express Tribune
40,000 posts being axed to save Rs36 billion
Listen to article The Cabinet Division on Wednesday disclosed that the drive to reduce government expenditures by abolishing posts would save Rs36 billion annually and one-fifth of the savings were ensured by cutting the lowest pay grade-1 posts of gardeners, sweepers and peons. The Cabinet Division, for the first time, shared pay scale-wise details of nearly 40,000 positions that had been abolished or declared as dying posts with the Senate Standing Committee on Finance. PPP Senator Saleem Mandviwalla chaired the meeting. A majority of these positions were already vacant and it would not have any immediate impact on the people already serving. However, there will not be new hiring on these positions and the contracts of the existing daily-wagers will not be further extended. Cabinet Secretary Dr Kamran Ali Afzal admitted that the recent cabinet expansion dented the symbolic value of reducing the expenses but said that in monetary terms the impact was minuscule. Finance Secretary Imdadullah Bosal commented on the implications of decisions of finance ministers for the economy over the past two decades. The Cabinet Division informed the committee about the government's rightsizing initiative. The cabinet secretary said that Prime Minister Shehbaz Sharif had instructed the reduction in the size of the federal government to improve efficiency and prioritise core responsibilities. He said that institutional reforms had also been initiated as part of the directive. The joint cabinet secretary shared scale-wise details of 39,896 posts in the public sector, which were abolished or declared as dying. Of these, 11,558 positions, which were either abolished or declared as dying, belonged to the lowest pay scale-1. It was equal to 29% of the positions being abolished. The average salary of pay scale-1 is Rs42,888 and peons, gardeners and sweepers are recruited in this scale. The committee was informed that the abolition of nearly 40,000 positions would save Rs36.3 billion annually. However, 19% or Rs7 billion in savings were against the lowest pay scale-1. Compared to grade-1, only two positions from the highest pay scale-22 with monthly average salary of Rs769,319 had been abolished, the committee was informed. The scrapping of two positions of grade-22 will annually save Rs20.8 million, or 0.05% of the total savings. The decision to end those positions had been taken by the government in August last year and the information was updated till February 18. Due to political reasons, successive governments have been inducting people in the public sector, mostly in low pay scales. The government has so far abolished only two positions of grade-21, which is the second highest grade, which will save Rs18 million. In scale-2, the second lowest pay scale, about 3,400 positions have been abolished to save Rs2 billion. From grade-1 to 16, a total of 38,692 positions have been abolished that will save Rs31 billion, or 86% of the total savings. Senator Sherry Rehman of PPP expressed concern over the government's approach to reforms. PM Sharif last month more than doubled the size of his cabinet. "On the one hand, the government talks about cutting costs, while on the other hand, it has doubled the size of the federal cabinet," she stated. The devolution logic had been offset by doubling the size of the cabinet, said Rehman. The appointment of a new minister results in a minuscule increase in operational expenditures, "but I concede that there is a symbolic value that is affected," said Cabinet Secretary Kamran Ali Afzal. He stated that the induction of new ministers was expected to enhance the overall performance of ministries, in line with the broader agenda of institutional reforms. He pointed out that one minister was heading more than one department, which was affecting the efficiency and required expansion. "The primary goal is for the federal government to focus on its essential functions, while transferring additional responsibilities to provinces," explained the cabinet secretary. Committee members objected to retaining the ministries such as health and education, which were provincial subjects under the constitution. However, the rightsizing committee has recommended the closure of many departments of such ministries. Senator Mohsin Aziz spoke about the quality of federal secretaries heading various technical ministries.
